The global permeate market is poised to witness USD 741.2 million in 2025, the industry is expected to reach USD 2,000 million by 2035, growing at a steady CAGR of 6.9% during the forecast period. Growing adoption of it as a cost-effective, dairy-based ingredient for the food, beverage, and animal feed sector is propelling the demand for the industry.
It is a low-cost byproduct of dairy processing and has growing popularity for its functional attributes and ability to enhance texture, flavor, and nutritional values across diverse applications. North America and Europe are seeing strong growth in industry, while the Asia-Pacific region is emerging as a high-growth industry due to increased dairy consumption and industrial uses. Thanks to its nutritional value and easy accessibility, it finds a wide variety of utilizations as a functional food additive in food, beverage, and animal feed use.
As the food industry moves towards clean-label, natural ingredients, it is increasingly used in dairy, bakery and confectionery applications to help meet consumer demands for food that is healthier and less processed. High protein food ingredients were further aided by rising demand for plant-based and lactose-free dairy alternatives.
Additionally, the expansion of the global livestock sector is boosting demand for animal feed made from it, which helps with digestion and improves nutrient absorption, so it is a crucial input in feed formulations. Increased consumer preference and demand for natural and clean label products will further elevate the industry, as these are healthier and low-fat options in comparison to conventional products and lead to the expected growth of the livestock and animal feed industry, as well as the functional derivatives for dairy based products.
Improvements in its quality due to technological advancements in Ultrafiltration and membrane separation technologies have facilitated its wider applications in multiple industries.
Sustainability initiatives in the dairy sector have also contributed to enhanced its production with a guaranteed supply chain solution for its end-users. Companies, especially Arla Foods Ingredients and Volac International, are leading the way by capitalizing on the functional benefits to develop innovative ingredient solutions for food, beverages, and animal feed. Despite strong industry performance, challenges including volatile dairy prices, supply chain barriers, and food safety and labeling regulatory issues remain.
Alternative dairy ingredients industry also rivals the manufacturer. Especially because it is well accepted in developed industries but growth of awareness and demand in emerging industries poses a challenge that can be met by targeted industry expansion initiatives.
To address these issues, companies are investing in sustainable sourcing, waste reduction methods and innovative processing technologies to improve the popularity and availability of it. Consumer concern about artificial additives and calorie-rich sweeteners is driving toward natural and sustainable ingredients that are transforming the industry. Manufacturers are interested in minimizing food loss and maximizing the sustainability of the dairy industry, creating ecosystem-friendly production processes, and making productive use of byproducts.
The reopening of a broader clean-label food, beverage, and feed application of it can bring great growth opportunities. Its position as a functional, value-added ingredient will see increasing global industry utilization as firms innovate new products and sustainable manufacturing processes.
| Metrics | Values |
|---|---|
| Industry Size (2025E) | USD 741.2 million |
| Industry Value (2035F) | USD 2,000 million |
| CAGR (2025 to 2035) | 6.9% |
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Cost efficiency, its high nutrition benefits, and its functional characteristics in food and beverage applications are the prime drivers for the global industry to gain a foothold. Dairy processors are involved in the quest to achieve maximum lactose-rich production through the improvement of relevant production processes, which are byproducts of whey and milk protein concentrate production.
Its use in food and beverage companies such as bakeries, dairy, confectionery, and beverage formulations is due to its capacity to boost the texture, sweetness, and mineral content while also reducing sodium levels. The distributors are focusing on establishing the cost-effective logistics and the efficient supply chain to the steady industry availability.
It goes indirectly to the end consumers by way of food products that have a good taste and well-balanced nutrition according to the consumer's preference. The industry is backed by the increasing demand for clean-label, natural sweeteners, and dairy-based functional ingredients, which obligates the industry actors to innovate and broaden its applications in the global food industry.
The table below presents a comparative assessment of the variation in CAGR over six months for the base year (2024) and current year (2025) for the global industry. This analysis reveals crucial shifts in performance and indicates revenue realization patterns, thus providing stakeholders with a better vision of the growth trajectory over the year. The first half of the year, or H1, spans from January to June. The second half, H2, includes the months from July to December.
| Particular | Value CAGR |
|---|---|
| H1 | 6.1% (2024 to 2034) |
| H2 | 6.2% (2024 to 2034) |
| H1 | 6.3% (2025 to 2035) |
| H2 | 6.8% (2025 to 2035) |
In the first half (H1) of the decade from 2025 to 2035, the business is predicted to surge at a CAGR of 4.6%, followed by a higher growth rate of 4.9% in the second half (H2) of the same decade. Moving into the subsequent period, from H1 2025 to H2 2035, the CAGR is projected to increase to 5.4% in the first half and remain considerably high at 5.6% in the second half. In the first half (H1) the sector witnessed an increase of 30 BPS while in the second half (H2), the business witnessed a decrease of 20 BPS.
Between 2020 and 2024, the global industry expanded steadily, driven by its increasing use in dairy, bakery, and animal feed applications. As a cost-effective byproduct of whey or milk processing, it has gained traction as a natural sugar and mineral source in food formulations.
Its use in bakery and confectionary items increased owing to the surge in demand for clean-label and functional ingredients that enhanced flavor, texture, and sodium reduction. Its use increased in the animal feed industry, too, based on its digestibility and contribution to the nutrients in livestock. Dairy prices keep changing, and even the supply chain can get disturbed. These are some challenges.
Between 2025 and 2035, the industry will increase due to technological advancement in dairy processing, solutions for sugar reduction, and plant-based uses. Sustainable sourcing and advanced filtration processes will improve purity and functionality. The growth of it in hybrid dairy substitutes, functional drinks, and pet food will open new growth opportunities, making it more relevant to the industry.
Comparative Market Shift Analysis (2020 to 2024 vs. 2025 to 2035)
| 2020 to 2024 | 2025 to 2035 |
|---|---|
| It is increasingly being applied for its cost effectiveness and affordability when used in food and beverage items. | It has been adopted more in functional and clean-label products because many consumers prefer natural ingredients. |
| North America and Europe dominantly produce and consume it, but the growth in the Asia-Pacific region is medium. | The Asia-Pacific region becomes a dominant area for growth by boosting its different dairy processing industries and changing dietary patterns. |
| It has mainly been used in bakery, confectionery, and dairy applications, with the least diversification benefit included. | Uses included increased amounts in infant nutrition, sports nutrition, and plant-based dairy substitutes. |
| Concerns arise because of the lactose content in limiting its use in lactose-intolerant groups. | Advances in filtration and processing technologies facilitate low-lactose and lactose-free permeate products. |
| Whey and milk permeate price volatility and impact market stability and profitability. | Increased supply chain efficiencies and diversified sourcing minimize price volatility and improve industry stability. |
| Regulatory differences between regions pose challenges to permeate trade and labeling. | Global regulation harmonization allows for smoother industry entry and growth for producers. |
| Research into its functional value in food processing and animal feed is growing. | Scientific progress emphasizes health advantages, increasing consumer awareness and industry demand. |
The global industry encounters risks stemming from the availability of raw materials, compliance with regulations, product perception, industry competition, and instability in the supply chain.
The risks arising from the company's supply of raw materials are mainly due to the company's dependence on dairy and whey processing. Since it is the byproduct of milk and whey filtration, the level of global dairy production, feed prices, and weather changes may influence the amount of whey and milk options that are available for the company as well as their prices. Any interruption in the production of milk and cheese directly influences its volume.
Regulatory compliance is different in each area, particularly for food, feed, and beverage applications. The FDA (the USA) as well as EFSA (EU) and FSSAI (India) are some organizations that put stringent thresholds on lactose content, labeling, and safety testing. Dairy regulations, sustainability requirements, or import restrictions are the changes that influence the global industry.
Consumer awareness and acceptance of the product are the problems related to food applications. While the good side of it is the fact that it functions as a sweetener and also contains minerals, some customers have a notion that it is a byproduct or filler ingredient, which might affect its prices in premium industries. What is more, people who cannot digest lactose may prefer to use products that do not have lactose as an ingredient, which results in the loss of some sales.
The competition in the industry is getting higher due to the admixture of alternative sweeteners, substitutes for milk powder, and non-dairy additives. Oat or almond-based powders, which are commonly seen as the basis for the whole plant, can take over the industry from ordinary dairy-based options.
The following table shows the estimated growth rates of the top five territories. These are set to exhibit high consumption through 2035.
| Countries | CAGR (2025 to 2035) |
|---|---|
| USA | 3.9% |
| Germany | 4.1% |
| China | 5.3% |
| Japan | 4.8% |
| India | 5.8% |
The USA industry is expected to expand at a 3.9% CAGR during the forecast period, according to FMI.
Increasing the application of economical dairy ingredients in food and beverage applications should impel the USA industry. Despite a significant proportion of it being discarded during whey and milk processing, it is utilized in bakery, confectionery, and dairy products as a natural flavor enhancer and sodium replacer. Its adoption is further driven by increasing consumer demand for clean-label and reduced-sodium products.
The livestock and pet food industries, on the other hand, are expanding their consumption of it owing to its nutritional value and digestibility. Areas of opportunity - Exports with increasingly advanced dairy processing technology play a growth opportunity in an established USA industry.
Growth Factor in the USA
| Key Drivers | Details |
|---|---|
| Increased Demand for Economical Dairy-Based Ingredients | It is a low-cost substitute for dairy solids, making it widely used in food and beverage applications. |
| Convenient Food and Clean-Label/Reduced-Sodium Trends | The growing consumer preference for natural, sodium-reducing ingredients has increased the use of it in processed foods. |
The German industry will expand at a 4.1% CAGR during the study period, according to FMI. The German industry is growing owing to an increase in the demand for economical dairy ingredients that are used in the food processing industry. Australia's robust dairy industry, coupled with cutting-edge processing technologies, makes it highly adept at producing the ingredient which is used extensively in bakery, confectionery, and dairy applications to improve texture and flavor.
Its adoption has also been growing due to the trend toward clean-label and reduced-sodium products, as well as a natural alternative to artificial ingredients. The animal feed industry is another critical component, as it serves as a valuable source of nutrition for animals. In addition, the expansion of dairy exports in Germany is driving the global need for permeate-based products.
Growth Factors in Germany
| Key Drivers | Details |
|---|---|
| Strong Dairy Industry | In Germany, the long-established dairy industry produces it as a co-product of whey and milk processing. |
| Rising Demand for Affordable Ingredients | It is cheaper than other dairy solids, making it favored among food manufacturers. |
FMI anticipates the Chinese industry to grow at a 5.3% CAGR during the study period. The growing food and beverage sector in China, especially in dairy, bakery, and confectionery, is driving the growth of the industry in China. As a cost-effective ingredient for improving flavor and texture with sodium reduction in processed foods, its use is gaining more and more popularity in the industry to increase shelf life.
Furthermore, the increasing livestock and poultry industries in China are expected to boost demand for animal feed formulations as a low-cost and highly nutritious energy source. Industry growth is also accelerated owing to increasing consumer demand for clean-label and natural ingredients. Technological developments in dairy processing and growing imports of it are also supporting steady growth in the industry.
Growth Factors in China
| Key Drivers | Details |
|---|---|
| Food & Beverage Sector Growth | Increasing use of it as a cost-efficient ingredient in dairy, bakery, and confectionery products. |
| Rising Demand for Animal Feed | Higher utilization of primates as a high-energy, economy feed material for livestock and poultry. |
FMI anticipates Japan's industry to grow at a 4.8% CAGR during the study period. The demand for functional and cost-effective ingredients in the food and beverage industry is driving the growth of the industry in Japan. This has accelerated the adoption of dairy permeate as a natural salt replacer in processed foods due to the country's focus on reducing sodium intake.
Moreover, Japan's mature dairy processing sector is promoting increased production and application of permeate in bakery, confectionery, and dairy products. Industry growth is also being propelled by the increasing animal feed industry, particularly for swine and poultry. Additionally, growing consumer demand for clean-label and sustainable ingredients is driving further growth of the industry.
Growth Factors in Japan
| Key Drivers | Details |
|---|---|
| Increasing Demand for Functional Ingredients | Dairy permeate is increasingly used as a cheaper ingredient in bakery, confectionery, and dairy products. |
| Sodium Reduction Initiatives | It is a natural salt replacer supported by government policies on lower sodium intake. |
The Indian industry is expected to expand at 5.8% CAGR during the forecast period, according to FMI. It is a collection of sauces, flavors, and amino acids that are utilized in a number of different sectors, including the food and beverage industry, pharmaceuticals, and other industrial applications.
Demand for it in bakery, confectionery, and dairy applications is driven by the growing dairy sector and the rising consumer demand for clean-label and natural ingredients. Also, the rapid expansion of the Indian livestock industry is propelling it use as a nutritional supplement for livestock feed. Around the world, government efforts supporting dairy processing and sodium reduction in food products further drive industry growth. Pressure to meet the demand for high-quality, processed, and convenience foods is another driver of its adoption.
Growth Factors in India
| Key Drivers | Details |
|---|---|
| Expanding Dairy Industry | The growing dairy industry in India is seen to be contributing to the use of it due to demand from the cheese, yogurt, and milk powder segments. |
| Increased Demand for Affordable Ingredients | It is an inexpensive substitute for lactose and other dairy solids, and food manufacturers find it appealing. |
Whey permeate, being more applicable in food applications, is expected to dominate the industry and is projected to hold a revenue share of around 62.4% of the global industry in 2025. The increased demand for low-calorie natural sweeteners on account of their cost-effectiveness, natural sweetness, and ability to replace synthetic sweeteners, bulking agents, and dairy solids in food and beverage applications is expected to fuel the industry growth during the forecast period. Growing adoption across bakery, confectionery, dairy, and sports nutrition has led to increased demand for high protein and functional food ingredients.
International firms such as Arla Foods Ingredients, Agropur, Volac, and Hilmar Ingredients are conducting significant research into whey permeate-based solutions to address the growing trends toward clean-label and functional food. It is used in the sports nutrition industry, as well as in supplemented protein drinks, meals, and energy bars.
Sustainability concerns in areas such as dairy processing are also propelling its usage. It’s a byproduct and is recovered when cheese and whey protein concentrate are produced, a saving of resources that allows for the reduction of waste and optimizes production costs for manufacturers.
It accounts for the highest share of the industry; however, it is also witnessing some momentum as a functional ingredient for the bakery and dairy industries, and its industry share can be seen growing consistently. It is used extensively to improve the solubility, texture, and taste of food products.
Significant industry players, including Glanbia, Fonterra, Idaho Milk Products, and Lactalis Ingredients, are utilizing it in dairy powders, confectionery, and infant nutrition formulations. Plus, the demand for affordable dairy ingredients resulting from sustainability initiatives will lead to steady growth as well with clean-label food and lactose-free product innovations.
With increasingly conscious consumer trends, the food and beverage industry comprises 33.3% of the global industry share in 2025. A versatile dairy ingredient, it is well-suited for bakery, dairy, and beverage applications and may help brand owners address consumer demands for flavor, nutrition, and value.
A major force driving its rise is the way it can add taste and texture while using fewer artificial sweeteners. As governments and health organizations drive for sugar reduction in food products, it represents a natural lactose-based sweetener that is particularly useful in low-sugar dairy products, meal replacements, and nutrition for children.
To improve functionality and nutrition, well-known food brands like Nestlé, Danone, and FrieslandCampina are adding it to their product lines. The industry has been shifting to functional high-value foods in response to pressure for transparency on food labels, and it's inherent sweetness and mineral content make it a perfect ingredient.
The industry shares it accounted for by the animal feed industry (28.7%) are mainly due to its low cost and high nutrient content. Its rich lactose, and mineral content gives it value as an energy source for livestock, poultry, and pet food.
The growth rate of livestock is also better with the use of products that improve palatability and digestibility, and this is one of the key reasons for the significant growth of the industry. In the swine sector, it is commonly used as a substitute for whey powder in piglet feed due to its positive impact on gut health and its high digestibility.
Key players such as Arla Foods Ingredients, Lactalis Ingredients, and Hoogwegt Group are broadening their portfolio of permeate-based solutions for feed. The growth of sustainability concerns in dairy processing also demands innovation to promote byproduct use, to limit waste, and to improve resource efficiency.
Driven by increasing focus on sustainable and efficient animal nutrition, it will continue to be a key ingredient in feed formulations around the world.
The global industry is growing and becoming highly competitive as there is a high demand for functional dairy by-products in foods, beverages, and animal feeds. Companies are investing in the latest dairy processing technology, sustainability initiatives, and strategic partnerships to strengthen their positions in the industry.
These include leading players such as Arla Foods Ingredients, Volac International, Lactalis Ingredients, Agropur, and Idaho Milk Products. These companies rely on their broad supply chains in dairy and their extensive R&D capabilities to develop high-end solutions for it.
Key offerings focus on lactose-rich dairy permeate application in food as well as beverage formulations, sugar replacement applications, and nutrition for animal feed. Innovations around the ingredient pertain to increased solubility, better nutritional profiles, and more cost-efficient ingredient solutions.
Industry evolution is ensured by the rising uptake in clean-label food production, the proliferation of its use in functional beverages, and more cost-saving awareness of its use as a sugar substitute. The emerging industries in Asia and Latin America are the new growth areas.
Strategic factors include mergers, acquisitions, and partnerships with regional dairy processors to reach out to a larger industry. Increasingly, sustainability initiatives such as carbon-neutral processing, waste reduction, and environment-friendly dairy production become important yardsticks for competitive differentiation. With growing demand, the emphasis is on scaling production, regulatory compliance, and product consistency.
Market Share Analysis by Company
| Company Name | Estimated Market Share (%) |
|---|---|
| Arla Foods Ingredients | 20-24 |
| Volac International | 16-20 |
| Lactalis Ingredients | 14-18 |
| Idaho Milk Products | 10-14 |
| Agropur Cooperative | 8-12 |
| Other Companies (Combined) | 20-30 |
| Company Name | Key Offerings and Activities |
|---|---|
| Arla Foods Ingredients | A global leader in whey-based permeate solutions, focusing on high-quality dairy ingredients, sustainability, and food innovation. |
| Volac International | Specializes in high-purity permeate for food and feed applications, with a strong focus on sports nutrition and dairy optimization. |
| Lactalis Ingredients | Offers premium permeate products with enhanced nutritional benefits, expanding its footprint through global dairy partnerships. |
| Idaho Milk Products | A key North American player focusing on functional dairy ingredients and high-solubility permeate formulations. |
| Agropur Cooperative | A leading dairy cooperative investing in sustainable permeate production and sugar-reduction solutions. |
Key Company Insights
Arla Foods Ingredients (20 to 24%)
The top firm in whey permeate production is investing in new dairy solutions and sustainability initiatives.
Volac International (16-20%)
One of the leading companies for applications in high-purity permeates in areas such as sports nutrition and strong research and developmental investments.
Lactalis Ingredients (14-18%)
A supplier known worldwide, they are venturing deeper into value-added permeate products in foods and beverages.
Idaho Milk Products (10-14%)
Biggest supplier across North America with high-functionality permeate in dairy, bakery, and nutritional applications.
Agropur Cooperative (8-12%)
This organization promotes sustainable dairy processing by utilizing its cooperative structure to develop new applications for permeate processing.
Other Key Players (20-30% Combined)
The industry is expected to reach USD 741.2 million in 2025.
The industry is projected to reach USD 2,000 million by 2035.
The key players in the industry include Arion Dairy Products B.V., VOLAC INTERNATIONAL LIMITED, Arla Foods Ingredients Group, Van Lee Melkprodukten Barneveld BV, Armor Proteines S.A.S., Idaho Milk Products, SIA Baltic Dairy Board, Milk Specialities, MILEI GmbH, Hochdorf Swiss Nutrition Ltd, Corporación Alimentaria Peñasanta, Batory Foods, Wisconsin Milk Marketing Board, Inc., EURODUNA Rohstoffe GmbH, and LAND O'LAKES, INC.
India, growing at a CAGR of 5.8% during the forecast period, is expected to see the fastest growth.
Whey Permeate is being widely used.
By product type, the industry is segmented into whey and milk permeate.
By application, the industry is segmented into the food and beverage industry and the animal feed industry.
By region, the industry is segmented into North America, Latin America, Western Europe, Eastern Europe, Asia Pacific Excluding Japan (APEJ), Japan, and The Middle East & Africa (MEA).
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Permeate Market
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